Bitcoin, Ethereum on a single DeFi layer? Starknet’s new plan, revealed

Starknet [STRK] seeks to unify and offer settlement on Bitcoin [BTC] and Ethereum [ETH], a first of its kind if achieved this year. Part of its statement read,

“Starknet will become the first L2 to settle on both Bitcoin & Ethereum, bringing the two largest blockchain ecosystems on a single layer, unlocking new DeFi opportunities and greater liquidity.”

The ETH L2 scaling solution added that it is one of the cheapest L2s and would bring low-cost transactions to unlock BTC DeFi potential.

As a result, it would position itself as BTC’s ‘execution layer’ for DeFi activities like lending, borrowing, staking, etc.

BTC DeFi potential Note, however, that there are other BTC scaling solutions, including Stacks, Lightning Network, BitVM, and BitcoinOS. As of early 2025, BTC TVL (total value locked) on its DeFi was about 68K BTC or $5.3B.

The TVL hit an all-time high of 73.2K BTC in January 2025. For comparison, that was a relatively small 4K BTC drop in Q1 2025.

When zoomed out from last December, BTC DeFI TVL grew from 48K BTC to nearly 70K BTC, translating to 43% growth.

It reinforced investor confidence in BTC DeFi, which was currently dominated by staking platforms Babylon, Lombard, SolvBTC, and payment provider Lightning Network.

Starknet Bitcoin DeFi Source: DeFiLlama

Interestingly, the increased interest in BTC DeFi could expand the TVL even further.

According to Dan Held, a crypto VC at Asymmetric and BTC DeFi investor, the sector has the biggest untapped potential and could explode to a $300 trillion market size. He said,

“If DeFi could be unlocked on Bitcoin, it would be by far the biggest opportunity ever to happen in crypto.”

On the Starknet update, Held termed it as ‘huge’ for BTC DeFi growth and mindshare.